What does 'ground rent' mean?

A ground rent refers to a scenario where an individual owns his house, but someone else owns the actual property (the “ground”). The homeowner pays the ground rent owner an annual fee, or a ground rent, as a rent on the land.

In Baltimore, this form of ownership dates back to the 18th century. The intent was to make homeownership affordable, by allowing purchasers to only have to buy the house, while paying an annual rent on the land.

Since many ground rent leases were established for 99 years, time and poor record-keeping made it difficult to know who owned the ground rent.

In response to this, since 2007 the Maryland State Department of Assessments and Taxation has maintained a ground rent registry to help homeowners determine who owns their ground rent.

Consequently, homeowners can now check for ground rent information and locate and determine their current ground rent owner by checking the Maryland State Department of Assessment and Taxation website.

When a property is listed, it is the listing agent’s responsibility to determine whether or not a listed property is subject to a ground rent (and, if so, how much). The property description on the MLS listing should note if the property is being conveyed in fee simple or as part of a ground rent.

Homeowners of properties subject to a ground rent that was created after April 8, 1884 have the right to purchase the ground rent, which would convert the property to a fee simple ownership. The purchase price is determined by a formula set by Maryland law that varies depending on the year of creation of the ground rent.

Further, if a property that is subject to a ground rent has not heard from the ground rent owner for at least three years, the homeowner can redeem the lease. For more information on this, please visit the Maryland SDAT website.

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